FIHC to build luxury hotel at Taipei Twin Towers

M-SHAPED:：Tourists may increasingly favor either five-star hotels or low-cost hostels, making it difficult for mid-end hotels to make money, FIHC’s chairman said

By Amy Su / Staff reporter

Fri, Nov 02, 2012 - Page 13

Formosa International Hotels Corp (FIHC, 晶華國際酒店集團) chairman Steven Pan (潘思亮) confirmed yesterday that the group plans to build a flagship luxury hotel with no more than 200 rooms in the Taipei Twin Towers (雙子星大樓) project near the Taipei Railway Station.

Pan said Taiwan’s hotel industry is gradually entering an “M-shaped” trend, in which hotels that are neither high-end nor low-end may have more difficulty improving their profitability in the near future.

The Taipei Twin Towers project is the largest urban development project in the nation’s history. On Oct. 28, a consortium led by Malaysia-based IGB Corp Bhd, together with its Japanese and Taiwanese partners, won the bid to develop the project at a cost of between NT$70 billion and NT$80 billion (US$2.4 billion and US$2.7 billion).

“We plan to launch a flagship hotel in the building that will be the first extra-luxury exhibition hotel for the group,” the chairman of Taiwan’s biggest listed hotel operator and owner of the Regent Taipei hotel told reporters after attending a forum yesterday.

Pan said the business model of the new hotel will be different from that of the Regent Taipei.

However, he did not specify whether the group would also launch a Regent Galleria (晶華精品) luxury shopping mall in the Taipei Twin Towers.

The local hotel industry will enter an era of polarization, focusing on either low cost or high value, with more tourists expected to stay in either a five-star hotel or a low-cost hostel, making it more difficult for middle-of-the-road players to boost their business, Pan said.

Pan added that he expected the global economic sentiment for next year to be better than this year following a US economic recovery and China’s economy bottoming out, which would be a positive driver for all hotel operators.

Even amid this year’s slowing economic sentiment, FIHC still reported a net profit of NT$818 million, or NT$8.47 in earnings per share, in the first nine months of the year, from the NT$751.25 million, or NT$7.77 per share, in net profits recorded a year earlier, the company said in its stock exchange filing.

For the third quarter — a slow season for business trips — the company still posted NT$258 million, or NT$2.1 per share, in net earnings, up 2.41 percent and 120 percent from a quarter and a year earlier respectively, on the back of exchange gains.

However, the Ambassador Hotel (國賓大飯店), the other listed hotel operator in Taiwan, saw non-operating losses drag down its profitability this year.

It reported NT$213 million, or NT$0.58 per share, in net earnings in the first nine months of the year, down 28.82 percent from a year ago, company financial data showed.

The latest report by Capital Securities Corp (群益證券) maintained an upbeat outlook on FIHC and the Ambassador Hotel for the fourth quarter, saying that promotions from the Taipei International Travel Fair that ended on Monday, as well as seasonal demand from business tourists, may bolster both hotels’ revenue during the period.